On Real Estate: First-time buyers spark rebound

For the first time in three years, the Illinois real estate market has shown a year-over-year increase. Last month, 10,350 homes sold, compared to 10,018 sold in September 2008.

While sales are up, median sales prices have dropped by almost 10 percent. Last September, the median home price in Illinois reached $176,450. As of September this year, the average sales price topped out at $160,000.

According to Mike Onorato, president of the Illinois Association of Realtors, first-time buyers have been out in full force with the first-time homebuyers tax credit in hand. Despite delays in underwriting, home loans are eventually being approved, and closings are happening. The decrease in median sales price isn’t bothering Realtors. First-time buyers are proving an asset in leveling the playing field.

“Home sale gains this month show the tax credit is working and should be extended through 2010,” Onorato said. “It is helping to stabilize home prices and creating thousands of jobs that rely on housing.”

Rates also remain low with several new homeowners taking advantage of 30-year marks around 5 percent. As of press time, rates on 15-year fixed loans hovered around 4.75 percent.

Home values are also stabilizing as sellers are seeing the difference between true market value and the inflated numbers of a few years ago. This, Realtors say, is resulting in an increase in the number of sales.

First-time buyers are still in the driver’s seat as supply still exceeds demand.

“For sellers, it is very important to set the right price to produce a sale in this market, which has two distinct levels of pricing—traditional sales and sales of distressed properties,” said Onorato, a Coal City broker.

Foreclosures are still driving the market, which gives those armed with the first-time tax credit even more power, especially as many bank-owned properties are in live-in condition when they’re listed. Investors are also buying up a considerable number of foreclosures, which keeps prices down for young families entering homeownership.